Posts tagged ‘Tax Cuts’

The Republicans who loathe spending programs as a form of anti-Christian reliance in fact worship a program known as tax cuts, ironically a government program in itself:

The other way to look at these credits and deductions is that they’re essentially government spending programs in disguise. After all, if these deductions didn’t exist, then either the deficit would be smaller or everyone else could pay fewer taxes. A tax credit that subsidizes the construction of affordable housing is no different than an explicit grant to do the same thing.

In Washington, however, tax expenditures generally aren’t considered spending programs. They’re considered tax breaks. And, as a new NBER paper by Len Burman and Marvin Phaup details, this view has had enormously perverse consequences over the years. Politicians always prefer tax breaks to new spending programs. So Congress ends up enacting a disproportionate amount of social policy through tax credits and deductions, the paper said, and that, in the end, can actually lead to higher taxes and bigger government than would otherwise be the case.

Burman and Phaup found that total U.S. tax expenditures will amount to $1.2 trillion in fiscal year 2011. That’s much, much larger than non-defense ($671 billion) or defense ($744 billion) discretionary spending. In other words, there’s a huge pool of federal spending that Congress doesn’t even consider to be spending. As the authors noted, “excluding income tax expenditures causes spending to be understated by about one-third.”

[I]n 2013 the Pawlenty plan would give people in the top one-tenth of 1 percent on the income scale (i.e., people with incomes above $2.7 million) an average annual tax cut of $1.8 million — which is more than four times what they got last year from the Bush tax cuts.

I would disagree with Auth on this one. If you track the past year month by month, the economy (and job creation) under Obama has been at a slow (but expected) rate. Any Democrat or Republican can only do so much. Obama’s “government assisting the private sector” approach is not the full answer and cutting taxes is certainly not (look at the last 10 years and the 9.1% unemployment rate and tell me why tax cuts for the rich have allowed this rate to shoot up). Obama is open to both of the above. Unfortunately for the GOP as seen last night, insanity will continue if they take the White House in less than a year.